August 17, 2012 / 1:27 AM / 7 years ago

El Salvador court threatens McDonald's with brand blackout

SAN SALVADOR, Aug 16 (Reuters) - McDonald’s restaurants in El Salvador may have to cover up their trademark golden arches if the world’s biggest burger chain fails to make a payment related to a long-running contract dispute in the country, a court said on Thursday.

The brand blackout would occur if McDonald’s fails to pay$23.9 million to a former franchise owner, although the court has yet to set a date for when the cover-up would come into effect.

El Salvador’s supreme court ordered the world’s biggest burger chain to pay the amount in 2005, on the grounds that McDonald’s unilaterally ended a contract with local franchise company Servipronto in 1995.

McDonald’s’ appeal was rejected in October last year.

The McDonald’s franchise in El Salvador is now owned by Servamatic, which declined to comment on the case.

A spokeswoman for McDonald’s in El Salvador also declined to comment.

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